Morning Scan: All the big stories to get you started for the day


IMF slashes India’s GDP growth forecast to 8.2 percent in 2022-23

The International Monetary Fund has cut India’s economic growth forecast to 8.2 percent for financial year 2022-23 from 9 percent estimated in January. The IMF warned that the Ukraine war would severely set back the global recovery, slow growth and stoke inflation. It also cut India’s 2023-24 growth forecast to 6.9 percent from 7.2 percent estimated earlier.

Why it’s important: Despite the lowered estimate, India is likely to remain the fastest growing major economy. However, high crude oil prices are bound to impact consumer demand and private investment.

Indices fall by 5 percent in five sessions due to heavy selling by FPIs

Intensified selling by foreign portfolio investors amid rising bond yields in the US and concerns over the global growth outlook has led to a near 5 percent drop in India’s benchmark indices in the past five trading sessions. FPIs have sold equities worth about Rs 18,000 crore in the past five sessions. The Sensex fell 1.23 percent, extending its five-day decline to 5.02 percent.

Why it’s important: High inflation and the ongoing conflict in Ukraine have made investors jittery. Globally, there’s a prospect of aggressive policy action to curb inflation. Investors are expecting a 0.5 percent rate hike from the US Federal Reserve next month.

Government will set up 75 digital banks this year: Sitharaman

India is planning to set up digital-only banks and nonbanking financial companies (NBFCs) to ensure that business continuity in the lending system is not affected even in exceptional times, finance minister Nirmala Sitharaman said at an event at the Atlantic Council think tank in Washington DC.

Why it’s important: Online financial transactions have taken off massively in India in recent years. Establishing digital banks and NBFCs is a logical consequence that will only strengthen the trend by offering a variety of services.

State Bank asks Future Retail for accountability on takeover of stores

The State Bank of India (SBI), one of the key lenders of Future Retail, has asked the firm for accountability on the issue of Reliance taking over around 800 stores without any prior intimation to creditors. Lenders, including SBI, have objected to Reliance taking over the stores. Future Retail must be held accountable for this, bankers said.

Why it’s important: Amazon has been fighting legal battles to stop the distressed Future group, which is now unable to repay loans, from selling its retail assets to Reliance. However, Reliance has taken over hundreds of Future’s supermarkets on nonpayment of rent, a move that creditors have criticised.

KKR, Canadian funds show interest in Macquarie’s road assets

KKR, Cube Highways, and Canadian pension funds CPP Investments and CDPQ have shown preliminary interest in a bunch of road assets put up for sale by Macquarie Asset Management, which is seeking an enterprise value of Rs 42 billion for the roads.

Why it’s important: There is a strong demand for yield-generating assets such as roads from foreign investors. The Indian roads sector is attractive because the regulations are sound and new structures such as infrastructure investment trusts have worked out well for investors in the segment.

India in favour of global crypto regulation network

India has pitched for a global framework to regulate cryptocurrencies, flagging their use in money laundering and terror financing as the biggest risks facing sovereign nations, finance minister Nirmala Sitharaman said during a discussion on the future of money at the spring meetings hosted by the International Monetary Fund in Washington DC.

Why it’s important: Although the government has imposed a 30 percent tax on earnings gains from virtual digital assets, the country still doesn’t have a regulatory framework for cryptocurrencies. The Reserve Bank has also expressed its reservations on such virtual assets.

Government to soon issue standards for electric vehicle batteries

India could soon come out with standards for electric vehicle (EV) batteries. The roads ministry is planning to come out with norms to put in place quality controls for batteries used in EVs. The policy will cover performance testing and manufacturing standards, along with heat resistance of these batteries.

Why it’s important: There have been several instances of EVs catching fire, which have made customers wary of buying them. Since both the government and private companies are betting heavily on rapid adoption of EVs in the country, strict quality standards to prevent such fires are necessary.

Private banks consider better pay packages to prevent attrition

Private banks in India are considering enhanced compensation and benefit packages to retain employees to tackle high attrition. HDFC Bank’s board, for instance, approved Rs 100 crore restricted stock units at Rs 1 each for mid to junior-level employees as part of the compensation structure. The incentive may be linked to employee performance.

Why it’s important: High inflation has eroded the earnings of the salaried class. In select high-growth sectors like finance and IT, which need to retain talent, employees are likely to get better pay packages and enhanced hikes this year.

High court refuses relief to Snapdeal in trademark infringement case

The Delhi High Court has refused online retailer Snapdeal’s plea seeking temporary relief against domain name registrars in a trademark infringement matter. The court said it cannot restrict these registrars from issuing registration under the Snapdeal trademark since it is not permissible for it to hold in advance that every alternative domain name containing the word Snapdeal will necessarily be infringing in nature.

Why it’s important: Domains with names deceptively similar to popular brands are quite common in cyberspace. There are, however, limited options for regulators and courts to preempt such behaviour and action can only be taken after a trademark infringement.

Direct seller Amway faces disruption in India business

After the Enforcement Directorate attached Amway’s assets worth Rs 758 crore in connection with an alleged money laundering probe, India’s top direct selling company faces formidable hurdles in growing its business in the country. Amway’s current revenues of Rs 2,000 crore are not even a fifth of what it had envisaged and like what it had earned in 2017.

Why it’s important: The company’s continuing trouble with law enforcement agencies is a dampener for business growth. The attractiveness of direct selling also seems to be waning in the country.

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